RusEnergy

10-13-2006 - Kommersant by Dmitry Butrin - Germany and France want Russia to keep to Europe’s energy rules
German Chancellor Angela Merkel has responded to Vladimir Putin’s offer to create an energy alliance between the two countries and send major reserves of the Shtokman gas deposit to Germany. Talks of the German leader and French President Jacques Chirac finished with a decision that France and Germany would form an energy alliance in the EU without third parties. At the same time, Russia was asked to keep to the Energy Charter, a document that Vladimir Putin dismisses as the one “running against Russia’s national interests.” French President Jacques Chirac and German Chancellor Angela Merkel signed an agreement on the creation of “balanced energy partnership” between the EU and Russia following a session of the French-German council of ministers in Paris yesterday. Russia’s energy partnership with Europe is to be formed next spring at an energy summit of the EU and its energy partners in Berlin. New relations are to be established in a special framework agreement which will replace the current partnership and cooperation agreement between the EU and Russia, signed in June 1994. It entered into force in December 1997 and was due to be valid for ten years.
Chances of Russia and the EU coming to an agreement in Berlin to create the axis of energy are not very high. An official statement of the French-German council of ministers says that “Russia should start quickly and effectively enforcing the Energy Charter and its appendix, the Transit Protocol.” The two nations are offering Russia to base the new agreement on principles of the charter as well as on the declaration of G8 nations, adopted at the St. Petersburg summit.
Russia’s President Vladimir Putin has repeatedly declared that the Energy Charter is unfavorable for Russia and is not going to be ratified, though Russia adopted it in 1994. Meeting Jacques Chirac and Angela Merkel on September 23 in Compiegne the Russian president confirmed that Russia would not sign documents of the Energy Charter and its Transit Protocol if the document was not amended so that it would be favorable for Russia. The declaration of French and German governments makes no mention of any changes in the charter but it also mentions the Transit Protocol which has long been a stumbling block in the Charter issue between Russia and Europe. Under the protocol, Russia should give access for free gas transit from the Central Asia to Europe while European pipelines do not fall under the force of the Transit Protocol.
Germany’s leader Angela Merkel basically gave a negative reply to Vladimir Putin who had earlier offered Germany one of the most lucrative deals ever. He suggested that export supplies from the Shtokman deposit be directed to Germany. The offer was voiced right after Gazprom’s CEO Alexey Miller had dismissed all foreign partners from potential participation in the project. Earlier, the Russian president had raised the Shtokman issue in Compiegne hinting that France-based Total, a short-lister for Gazprom’s partners on Shtokman since September 2005, had good chances to enter the project worth as much as $20 billion.
Vladimir Putin raised the stakes this week in Germany after Gazprom had announced that it would develop Shtokman on its own. Russia’s president said at a news conference with Angela Merkel on Wednesday that Germany could expect the supply of 50-55 billion cu. meters of gas from the Shtokman field, not the early declared 20-45 billion. This statement could give Germany a hope for a 70 percent rise in production at Shtokman whose reserves are estimated at 2 trillion cu. meters of gas. The Russian president made more than a profitable offer to Angela Merkel: “Germany may turn from a large consumer into the European center of gas distribution.”
This offer meant a separate deal between Russia and German on energy policy inside the European Union. It is worth mentioning that the EU directive on the liberalization of the gas market comes into force on July 1, next year. The blueprint makes Gazprom’s operations on EU markets harder as it does not guarantee the Russians free gas transit across the EU to ultimate customers – Germany’s E.On Ruhrgas and RWE, French Gaz de France and Austria, Italy and Greece. Raising stakes, Vladimir Putin obviously took it into account that Germany was still the only opponent of gas market liberalization in Europe. The liberalization is not profitable for E.On Ruhrgas and RWE as well as for Gazprom’s partners, German gas distributors WINGAS, WIEH and Verbundetzgas.
Angela Merkel, however, preferred another agreement – the one with Jacques Chirac who was left overboard by Russia’s president in Shtokman agreements. The German-French joint declaration mentioned relations with Russia only in the second point. It was the alliance between the two countries on energy policy in the EU that made number one. The upcoming Berlin conference is to concentrate on the EU-Russia framework agreement as well as development of energy partnership with the Central Asia, Caspian region nations, Northern Africa’s countries and cooperation with transit countries, such as Ukraine and Moldova which suffered Gazprom’s gas blockade this January.